AT&T Inc.’s share price down, reports second-quarter profit decline as customers shift to phone financing

AT&T Inc., the second-biggest wireless carrier in the U.S., made an official statement yesterday, posting a 7.2% drop in the second-quarter net income. The companys profit fell short of analysts projections as more clients preferred to pay for devices with instalment plans, which resulted in decreasing the companys profit.

The Chief Executive Officer of the mobility unit of AT&T Inc. – Mr. Ralph de la Vega commented on the companys performance in a statement that was cited by Reuters: “What we saw happen throughout the second quarter were very aggressive promotions by our competitors but all the while our churn decreased. We are confident that what we saw in Q2 was part of the transition we had to make to go from service to equipment revenue in NEXT.”

According to the companys statement, AT&Ts profit excluding some items over the second quarter amounted to 62 cents a share. It missed the initial analysts forecast of 63 cents per share. The company also said that its sales increased by 1.6% and reached 32.6 billion dollars, which was also trailed analysts expectations of 33.2 billion dollars.

More than 1 million of the so-called postpaid customers were added by the company over the second three months. The 1.4% drop in the companys wireless service revenue of 15.1 billion dollars came as AT&T Inc. has cut the prices of its services for most of its customers.

The wireless carrier, which has been currently focused on the acquisition of DirecTV, has also undertaken an aggressive strategy in order to push its smartphone sales at full price. The Chief Analyst of Jackdaw Research Mr. Jan Dawson commented for Reuters: “AT&T has quite aggressively moved its existing base of customers in contract to the new plan. It is a fairly predictable shift and over time it should be a positive one for AT&T, but it has an unpleasant short-term impact on results.”

AT&T Inc. was 0.17% down to close at 35.88 dollars per share yesterday, marking a one-year change of +0.20%. According to the information published on CNN Money, the 23 analysts offering 12-month price forecasts for AT&T Inc. have a median target of 36.00, with a high estimate of 42.00 and a low estimate of 25.00. The median estimate represents a +0.33% increase from the last price of 35.88.